Ofcom considers options for price of Copyright Infringement appeals process
The 'three strikes and you end up on the Serious Infringers List' (SIL) scheme that is part of the Digital Economy Act, has as yet not taken effect in the UK. The intention of the act is that broadband providers maintain a copy of the Serious Infringers List of their customers, and upon a court order will provide this to copyright holders or their agents who can then decide to pursue serial infringers in court.
Each time a movie studio, record company or their agent sends a Copyright Infringement Report (CIR), the broadband provider would record a 'strike' against that user once they identify them based on the time of the alleged incident, as well as the IP address. Once a user accumulates three strikes they would be placed on the Serious Infringer List. The provider would also be obliged to pass on the notification and the subscriber then has the opportunity to appeal. It is also possible to appeal being added to the Serious Infringer List itself.
Ofcom has a very important role to play, as it has a duty to draw up and enforce a code of practice to regulate this process and it must establish an independent body to evaluate appeals. The Ofcom report subtitled Options for Reducing Costs looks closely at how much it estimates an appeals process will cost. The cost of copyright infringement is being suggested as £400m, and a likely cost of running just the appeals process is at around £40m.
As no-one has run a system exactly like the one proposed, Ofcom has great difficulty at estimating costs and the amount of appeals that are likely. The report interestingly does not attempt to look at how accurate infringement detection methods are. What is of concern to some will be that other than the costs to a Copyright Holder of submitting the CIR, there is little pressure to deter a scatter gun approach. This is where the appeals process kicks in though, as one would hope that if the independent Appeals Body got a high proportion of successful appeals for one Copyright Holder, action would be taken to ensure accurate detection.
To give people some idea of the possible costs of appeal, Ofcom has considered three prices, free, £5 per appeal or £10. In all the scenarios considered, the money raised by the appeals does little to dent the cost of running the appeals process which is estimated at £400 per appeal, but the assumption is made that it will reduce the number of appeals. The Department for Culture, Media and Sport (DCMS) have however decided that a £20 fee, to be refunded on successful appeal, would be more appropriate and it hopes this will stop people using appeals to disrupt the system. One serious danger is that if people are deterred from appealing, and appear frequently enough on the lists, they may be subject to court action by the Copyright Holder, and an embarrassing result would be for there to be high profile failures in court over the quality of evidence.
The issue of using IP addresses and detection technology used to detect infringement has been brought into question by the ACS:Law situation. If Copyright Holders do plan to take people to court one hopes that they have firm evidence. The issue of connection hijacking via wireless is to some extent covered by a requirement on the letters sent out by internet providers to cover securing your internet connection. The need for Copyright Holders to be accurate with its data is highlighted by the fact that even if just 5% of people (250,000 appeals) were to appeal it would cost £100m to process all the appeals.
At the end of the day, it is unlikely Copyright Holders can totally stop infringement, just in the same way they are unable to stop people lending out DVDs to friends. Their only hope can be to reduce infringement to a reasonable level, and to a great extent it is not even known if the £400m per year is truly lost revenue. In cases where people are uploading content and making money from this then the lost revenue argument stands, but in cases where people are viewing content for free when otherwise they would never have bought it even if it was £1 to own a copy, one wonders how much revenue that cost.